CLIENT PORTAL
CLIENT PORTAL

understanding the world of

Shared Ownership & Shared Equity

MORTGAGES

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Shared ownership and shared equity mortgages both provide alternative paths to homeownership by helping people afford property, but they function differently in terms of ownership, payments, and structure.

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Shared Ownership Mortgages

A shared ownership mortgage is designed for buyers who can’t afford to purchase 100% of a property upfront. Instead, they buy a share (usually between 25% and 75%) of the property and pay rent on the remaining share, which is owned by a housing association or another entity. Over time, they can choose to buy additional shares in the property (a process called staircasing) until they own it outright.

Key Features

  • Initial Ownership: The buyer owns a portion and rents the rest.
  • Rent: Rent is paid on the remaining share owned by the housing association.
  • Mortgage Requirements: A mortgage is typically taken out for the share that the buyer is purchasing.
  • Staircasing: Option to buy additional shares over time, reducing rent obligations until full ownership is achieved.

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Shared Equity Mortgage

In a shared equity scheme with a discounted purchase price, the buyer purchases the property at a reduced price instead of using an equity loan. This reduced price is typically set at a certain percentage of the property’s full market value (for example, 80%). The housing developer, government, or housing association retains an equity stake in the property equivalent to the discount (in this example, 20%).

Key Features

  • Full Ownership: The buyer owns 100% of the property from the outset but has only paid a portion of its market value.
  • Discounted Purchase: The buyer’s mortgage is based on a reduced percentage of the property’s full market price, making it more affordable.
  • Equity Stake: The housing provider holds a stake in the property equal to the discount percentage (e.g., 20% if the buyer paid 80% of the market value).
  • Repayment Obligation: When the property is sold, the owner must repay the original discount percentage of the current market value. So, if the property was bought at an 80% discount, they would need to repay 20% of the sale price.

“Having Roxy help us find a mortgage meant that we had so much more choice and saved a lot of time trying to shop around ourselves.

We also really appreciated how flexible Roxy was with fitting us in around our busy work schedules so she could find a mortgage that suited us.”

CLAIRE

York